The Real Deal New York

Appellate Court repeals ruling against Gluck at Independence Plaza

Developer Laurence Gluck is on somewhat of a winning streak. Just 11 months after a federal judge ruled the developer did not illegally deregulate apartments at his 1,328-unit Tribeca Complex Independence Plaza, at 80 North Moore Street, a state Appellate Court has followed suit, reversing an earlier ruling to the contrary, The Real Deal learned today.

The property’s tenants association first filed suit against Stellar Management, the company at which Gluck is chairman and CEO, in 2005, claiming it deregulated the units, which Stellar had just removed from Mitchell-Lama in order to raise the rent roll, while simultaneously receiving J-51 tax exemptions from the city. Gluck should not have been allowed to raise rents on the units while still receiving tax breaks, they said. The tenants initially triumphed in the case, according to a decision in August 2010.

Gluck’s attorneys later filed an appeal, arguing that the landlord should not be held responsible for the issuance of the J-51 credits; it had been the city Department of Finance’s mistake to continue to issue the credits after the complex’s withdrawal from Mitchell-Lama, his representatives argued in court papers, and once he had become aware that the credits were continuing to be sent, he had informed DOF and repaid all J-51 benefits the property received after June 28, 2004, plus interest. No exact monetary figures were specified.

The Supreme Court sided with Gluck’s rationale, saying in today’s decision: “We hold that Independence Plaza‘s continued receipt of tax benefits after it exited the Mitchell-Lama program was merely the result of DOF’s failure to adjust [the development’s] tax liability,” it said.

The ruling, which does not necessarily mark the end of the saga for Gluck — the tenants’ attorney Seth Miller said the tenants plan to file another appeal — is nevertheless a sign that the developer could be victorious in the end, his attorney said.

“Today’s unanimous ruling by the New York Appellate Division, the highest court thus far to consider this issue, holds that Independence Plaza North did not become rent-stabilized upon its withdrawal from the Mitchell-Lama program,” said Stephen Meister, the attorney representing Stellar, in a statement to The Real Deal. “This decision is a clear reversal of a prior ruling by the State Supreme Court. The Appellate Division, in ruling that [Independence Plaza] is not rent stabilized, came to the same conclusion as that of the Federal District Court in the spring of 2011.”

Despite the ruling, tenants at Independence Plaza will remain protected from massive increases in rent, Meister said. Following the withdrawal from Mitchell-Lama, Stellar entered into an agreement with the tenants’ association, under which the tenants’ association agreed to try to urge every tenant to apply for Section 8 housing benefits.

“Regardless of today’s ruling in favor of the ownership, the existing residents of Independence Plaza have been protected under a voluntary and generous landlord assistance program that the owners of the building negotiated in 2004. That program remains intact today,” he said.